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Jerome a Paris:

My point is to say that the bigger problem is the allocation of pain rather than the size of the crash. Asset owners, in particular financial asset owners, are protected at the expense of workers. Austerity ensures that, but it can certainly also happen under devaluation/inflation, depending on which policies go along.

I don't think there's anything today that cannot be solved by high marginal tax rates and severe re-regulation (and breakup) of banks.

How would this solve the problems of Portugal?

As I see it, the currency union means that the peripheral countries need transfers and an industrial policy or we are eventually facing the depopulation of the periphery.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!

by A swedish kind of death on Wed Apr 13th, 2011 at 08:06:09 AM EST
[ Parent ]
The current situation is bizarre - explosively incoherent banker-politics pretending to be sound and wise economic management.

But the problem isn't just the fact that the policies make no sense - it's that there's no group or organisation that can offer a solid counterpunch against them.

Effectively the Bundesbank and "investors" decide policy, and governments exist solely to implement it.

If the policy happens to be suicidally inappropriate for a given government, that government can always be replaced.

However, governments are not allowed to set policy for banks and investors. Even minor restrictions, like the ones being proposed in the UK, are met with outraged howls and self-righteous huffing.

It's obvious that nation states are no longer able to act as sovereign entities. Even when pols understand what's happening, and don't choose to be complicit with it, there's very little individual governments can do.

The only workable solution is an EU-wide - preferably an international - political front to oppose investor domination.

This can't take the form of a single party or wing, but has to include senior (dissenting) figures from across the region working together and coordinating responses and actions.

This isn't likely to happen - I'm not holding my breath for it. But unfortunately I think it may be the only way to stop the neo-lib thugs before they break something permanently.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Apr 13th, 2011 at 08:33:52 AM EST
[ Parent ]
ThatBritGuy:
It's obvious that nation states are no longer able to act as sovereign entities. Even when pols understand what's happening, and don't choose to be complicit with it, there's very little individual governments can do.
Spain's Zapatero gets Chinese investment pledges | Reuters
China will continue to buy Spanish debt and will help to fund a restructuring of its savings banks, a Spanish government source said after Chinese Premier Wen Jiabao met Spanish Prime Minister Jose Luis Rodriguez Zapatero in Beijing.
The figure being thrown about in the Spanish press is €9bn to recapitalize the Cajas and an unspecified amount of debt. Wen Jiabao is quoted calling Spain "China's best friend in Europe".

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 13th, 2011 at 08:44:10 AM EST
[ Parent ]
to be China's best bitch in Europe?

['s Macho Moment of the Day™ Technology]

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Apr 13th, 2011 at 12:53:15 PM EST
[ Parent ]
El mayor fondo chino niega que vaya a invertir 9.000 millones en las cajas · ELPAÍS.comChina's biggest fund denies it will invest €9bn in [Spain's] Cajas - ElPais.com
El Ejecutivo español admite que se equivocó de fondo y que no se habló de ninguna cantidad, aunque mantiene que Pekín está interesado en el sector.- Hu Jintao: "La visita de Zapatero es un éxito"The Spanish government admits they spoke of the wrong fund and that there was no talk of amounts, though they maintain that Pekin is interested in the sector. Hu Jintao: "ZP's visit is a success".


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 14th, 2011 at 06:13:41 AM EST
[ Parent ]
Yes, political capture is the basic problem. No matter what a crisis consist of, the recepy is the same - take from the poor and give to the rich. Which leads to new crisises, more shock therapy and so on.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!
by A swedish kind of death on Wed Apr 13th, 2011 at 02:44:01 PM EST
[ Parent ]
ThatBritGuy:
senior (dissenting) figures from across the region working together

a choir in the wilderness?

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Wed Apr 13th, 2011 at 08:02:26 PM EST
[ Parent ]

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